College students fall victim to credit card debt

Infographic by Ali Neshati

In an economy that continues to decline, credit cards present a temptation to spend money one hasn’t made yet. For college students, however, spending on credit can be particularly dangerous since many do not have a full time job to pay back their debts.

“I don’t want to have to pay it back, so I just don’t want to get involved in it,” said Eric Selzer, freshman undeclared major. “My parents were like, ‘you should get a credit card,’ but I can’t pay the bills.”

In 2007, 56 percent of students carried four or more credit cards by the time they reached their senior year, with an average balance of $2,864, according to the Young Americans Center for Financial Education.

This is both an increase in average balance and a decrease in amount of undergraduates with credit cards. According to www.creditcards.com, in 2004, 76 percent of undergraduate students had credit cards and the average undergraduate students had $2,200 in credit card debt.

The allure of blowing money can be a strong one for some college students and if it is money that they don’t have, the consequences can come back to haunt them.

“You want to splurge, obviously and you can go a little further if you have more money,” said Emma Troutt, freshman elementary education major.

Credit card debt can drain a post-graduate’s resources by quite a bit, especially if they’re trying to make loan payments or even struggling to find a job.

“I think people get too in debt,” Selzer said. “They get too excited about having a credit card, having money right there, then they can’t pay it back.”

But despite the enticement of spending now and paying later, many students have kept a sensible leash on their personal spending.

“One, I’ve used for buying books for class,” said Mindy Anderson, graduate in teaching English as a second language. “(The other card is) for when I don’t make enough money to pay my bills.”

Others use credit cards with approval of their parents to help them get by with living away from home.

“It’s on my parent’s account, so I just pay them back,” said Taylor Clary, freshman elementary education major. “I never go in debt. But it doesn’t help, because I don’t work up credit.”

Students use credit cards for a variety of things, from getting food at a restaurant to buying toothpaste at Wal-Mart.

“My dad didn’t feel that it was safe for me to get gas by paying,” Clary said. “He heard too many horror stories of girls walking into gas stations and paying in cash.”

Some parents allow their children to use credit cards for student needs because they can benefit from their child’s transactions.

“I think (my family has) three, but they don’t use them all at once,” Clary said. “My mom is doing different point systems and different rewards that they offer.”

According to a study on money-zine.com, written by Georgetown University, College students are more likely to pay off their credit card balance than any other demographic group studied. While students are much more likely to pay off their balances, they tend to pay late and exceed their credit limits more frequently than other groups and therefore incur more fees than other groups.

Many students who have their own credit cards or those of a parent are very frugal with the privilege, spending only when necessary. However, over time, money can become a necessity.

According to creditcards.com in 2008, among the 35 percent of college students with credit cards that do not pay their balances in full every month, the average balance is $452. This is down 19 percent from 2007. Moreover, this balance is approximately one-third the size of the average balance for active non-student young adult accounts and one-fourth the size of active accounts for older adults.

Despite the risks, the option of credit cards always awaits those willing to sign up.

“If worst comes to worst, if I really need it for an emergency, I guess I’d use it, but I don’t think I would get one just to get one,” Selzer said.

While the majority of people, 55 percent of credit card users, keep a balance on their credit cards, according to creditcards.com, the average American with a credit file is responsible for $16,635 in debt, excluding mortgages.

For those people in debt, the amount that they have to give to repay can really add up. According to the Young Americans Center for Financial Education, average workers between the ages of 25 to 34 must spend 25 cents on every dollar earned on debt repayments and the number of 18 to 24-year-olds declaring bankruptcy has increased 96 percent in ten years.